Gold hit a fresh 3-month high overnight, before marginal profit-taking took effect. This morning in New York, gold has risen briskly to re-test the $1,130 level. Yesterday, April COMEX gold futures settled at their highest point since November 3rd, up 1% to $1,128.00. This gain adds to the 5.3% that gold is already up this year. Spot gold closed at the same price Monday, breaking resistance at $1,125 an ounce.
The dollar is marginally weaker this morning, lending a little support for gold to hold near $1,130. The 200 DMA stands at $1,129.80 today, giving extra strength to that $1,130 resistance level. This is the first time that gold has broken upwards through the 200 DMA since October 28. Gold's performance since the first of the year has more analysts speculating that we may have seen a bottom for the yellow metal.
Oil continues to be a millstone around the stock market's neck, as plummeting crude prices pull Wall St down for another day. Shortly after the opening bell, the Dow was down more than 200 points. Yesterday's 6% loss for oil wiped out all the 4.4% gains of last month's rally. Prices are down nearly 5% in early Tuesday trading. These heavy losses the last two days have been fueled by economic slowdown in China, and increases in oil production by OPEC. This weakness then cascades into the broader markets as energy stocks take a beating.
Look for gold to consolidate around present levels ahead of Friday's Non-Farm Payroll report for January. Widely seen as a barometer of economic activity in the US, it also is used as a bell weather for the odds of an interest rate hike by the Federal Reserve.
As far as today's activity, we're looking at support levels at $1,123 and then $1,119 (50% Fibonacci retracement from the recent large high.) First resistance is $1,130, If that level is breached, we may see a rally to $1,136, the 61.8% Fibonacci retracement level.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product